Late Rally Catapults Dow Above 6,600 Level

A late turnaround Tuesday pushed the Dow Jones industrial average to its first close above 6,600 as bargain-hunting investors shrugged off a worsening interest rate backdrop in another volatile session.

Broader measures also turned positive, with the Nasdaq market closing at a record high for the second straight day.

The Dow erased a 55-point deficit, rising 33.48 to 6,600.66 as several leading components reversed course in the afternoon. On Monday, the blue-chip barometer stumbled to a record high after surrendering a 75-point gain. The move above 6,600 marks a 10 percent advance less than three months after the Dow’s first close over 6,000 on Oct. 14.

Stocks were pressured from the opening of trading by another weak day in the bond market, where interest rates have been rising over the past week amid a series of surprisingly strong economic reports.

“Investors are nervous that if inflation picks up, earnings are going to be hurt by higher interest rates,” said Robert Freedman, chief investment officer for the John Hancock Funds in Boston.

Advancing issues outnumbered decliners by nearly a 3-to-2 margin on the New York Stock Exchange, where volume was heavy at 538.19 million shares as of 4 p.m., up slightly from Monday’s brisk pace.

Some of the stocks that moved substantially or traded heavily Tuesday:

NYSE

Silicon Graphics, down 1-3/4 at 25-1/8.

The maker of computer workstations warned that manufacturing delays will result in breakeven earnings for its second quarter ended Dec. 31.

Wal-Mart Stores, up 1-3/4 at 23-7/8.

The Bentonville, Ark.-based retailer reported that its December sales rose 7.2 percent at stores open at least a year.

Santa Fe Pacific Gold, up 1-1/8 at 15-1/8.

Newmont Mining increased its takeover bid for the New Mexico-based company to stock worth $2.2 billion, or about $16.50 per Santa Fe share.

NASDAQ

Noodle Kidoodle, down 1-1/2 at 4-3/8.

The toy retailer’s sales for the eight-week holiday period ended Dec. 28 fell 2 percent at stores open at least a year.

Rainforest Cafe, up 2-1/8 at 22-3/4.

The restaurant chain operator’s board approved the repurchase of up to a million common shares over the next year. On Monday, Rainforest shares slid 14 percent on indications analysts are lowering 1997 earnings estimates for the Minneapolis-based company, the Dow Jones News Service reported.

AMEX

American List, down 7-1/4 at 22-7/8.

The Mineola, N.Y.-based company’s earnings and revenues for its third quarter ended Nov. 30 were below analyst forecasts.